KABUL: President Ashraf Ghani on Saturday cancelled a multimillion government’s contract with a former Kabul Bank chief executive and major defaulter Khalilullah Ferozi for an ambitious residential scheme.
The notable businessman stood with top government officials on Wednesday as he signed the contract for a new township: 8,800 homes across 33 acres of prime real estate in the heart of the capital, with an initial investment of at least $95 million.
The project “Smart City Township” inaugurated on Wednesday will see the Kabul Bank defaulters to take part in the investment, with government officials saying it would enable the debtors to pay their obligations.
Ferozi, who was sentenced to 15 years in jail in a court verdict last November after he failed to pay his debts, was one of the main factors behind the collapse of Kabul Bank and he shares a big part in the project worth $900 million.
However president’s legal adviser, Abdul Ali Mohammadi, said at the inaugural ceremony that the government’s recent plan was aimed at helping debtors of Kabul Bank to start their businesses in order to repay their debts.
Also present at the event was Ahmad Zia Massoud, President Ashraf Ghani’s special representative for reforms and good governance, who called the programme as effective in recovering Kabul Bank’s stolen money.
The move, however, led to mounting criticism of the government.
Once the country’s largest lender, the Kabul Bank plunged into deep crisis in 2009, when it lost $987 million in fraudulent property deals, huge off-book loans and credit to fake corporations.
Mohammadi had said the bank’s screening commission had decided to recover loans from defaulters in easy ways.
As long as the convicts were in jail or abroad, they could not repay their debts, he argued, saying the Cabinet had decided that the debtors be facilitated to make investments within the country to be able to repay the loans.
The Presidential Palace in Kabul said President Ashraf Ghani terminated the Memorandum of Understanding (MoU) with Khalilullah Ferozi who had been convicted by the court on the charge of embezzlement and did not meet legal conditions for the contract.
The government signed an MoU on the township project with Ferozi and Nabizada Wardak Ltd in order to accelerate the process of recovering loans from the debtors.
President Ghani ordered the authorities concerned to assess legal aspects of the contract with the convicted person, a statement from the Presidential Palace said.
The statement said all decisions concerning the judiciary could not be changed by any other pillar of the state, except the judiciary itself.
Before the contract was cancelled, John Sopko, the special inspector general for Afghanistan reconstruction (SIGAR), told Pajhwok Afghan News the agreement with Ferozi was troubling.
“I’ve heard from the international community and some businessmen that they are troubled by this,” he told Pajhwok Afghan News in an exclusive interview. “It causes concerns but I don’t know the facts yet.”
Sopko said the rule of law was important particularly when Afghanistan wanted to get more foreign investors to come. “I was advisor to many large international companies when I was in private practice. And I know they probably would be concerned as to what this means about rule of law in Afghanistan”
“I’m worried that this may hurt foreign investment at a time that you really need foreign investment,” he continued, adding that that’s not how the US government would deal with such people or put them on work release.
He said investors took some risks but there were some risks they did not want to take. “And one is they got to have a working judicial system and it’s got to be transparent so that is something I know large corporations would be looking at some very closely.”
Earlier, civil society activists also sharply reacted to the release of Ferozi. The Integrity Watch Afghanistan (IWA) said allowing convicted debtors of Kabul Bank in key projects “is a challenge for economy and credibility of Afghanistan.” (PAN)